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Sunday, January 31, 2016

60 Minutes Exposé on Money Laundering Into the U.S. (1/31/16)

60 Minutes had an exposé on money laundering into the U.S., a process enabled by the ease to create U.S. corporations whose owners are anonymous. I recently posted on some U.S. initiatives to curb the practice for real estate cash deals in the names of corporations whose owners are anonymous. More on Transparency for Entities Acquiring Valuable Real Estate in Some U.S. Markets (Federal Tax Crimes Blog 1/23/16), here; and One Step in Attacking Lack of Transparency in U.S. (Federal Tax Crimes Blog 1/13/16), here. Both article have links to other sources.

The 60 Minutes program involved undercover investigations by Global Witness, a London-based nonprofit organization that exposes international corruption, here. The 60 minutes programs are entitled Anonymous, Inc., parts I and II. The programs with transcripts and some extra materials and key excerpts are available here. (Note: Ad blockers must off in order to access the content.)

Here is the opening from the transcript:

If you like crime dramas and movies with international intrigue, then you probably have a basic understanding of money laundering. It's how dictators, drug dealers, corrupt politicians, and other crooks avoid getting caught by transforming their ill-gotten gains into assets that appear to be legitimate.

They do it by moving the dirty money through a maze of dummy corporations and offshore bank accounts that conceal their identity and the source of the funds.

And most of it would never happen without the help -- witting or unwitting -- of lawyers, accountants and incorporators; the people who actually create these anonymous shell companies and help move the money. In fact, the U.S. has become one of the most popular places in the world to do it.

Tonight, with the help of hidden camera footage, we're going to show you how easy it seems to have become to conceal questionable funds from law enforcement and the public.

You need look no further for evidence than the changing skyline of New York City, where much of the priciest residential real estate is being snapped up not by individuals, but by anonymous shell companies with secret owners.

There's nothing illegal about it as long as the money's legitimate, but there's no way to tell, if you don't know who the real buyers are. It is one of the reasons Global Witness, a London-based nonprofit organization that exposes international corruption, came to New York City 19 months ago. It wanted to see how helpful U.S. lawyers would be in concealing questionable funds.

This hidden camera footage was shot in law firms across Manhattan without the lawyers' knowledge by the man in the gray coat with the German accent.

The hidden videos recorded some pretty disturbing behavior by lawyers. Some of it is perhaps ethically equivocal, but one lawyer did show the "client" the door. Here are two of the excerpts:

The lawyer who claimed that lawyers are immune because they run the country, here.

The New York Times has this article on the program: Louise Story, Report Describes Lawyers’ Advice on Moving Suspect Funds Into U.S. (NYT 1/31/16), here. Excerpts:

“It wasn’t hard to find lawyers to suggest ways to move suspect funds into the United States,” said Stefanie Ostfeld, a spokeswoman for Global Witness. “We went undercover because it is the only way we could show what really happens behind closed doors. The findings speak for themselves — something urgently needs to change.”

* * * *

In recent weeks, federal law enforcement officials have said they are beginning to focus investigations on lawyers and other professionals who facilitate money laundering. The Treasury Department announced a program to require real estate firms to help it uncover and track people who use shell companies to purchase high-end properties.

This week, a bipartisan group of lawmakers is planning to introduce a bill in the House of Representatives to require more transparency into shell companies nationwide. And later this week, activists in London will hold what they are calling a Kleptocracy Tour, a bus ride past properties that they said had been associated with illicit money. They plan to hold a similar tour in New York in April.

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